IRS Proposes Expanded Racial Nondiscrimination Policies for Tax-Exempt Private Schools
The Internal Revenue Service (IRS) has published proposed regulations that would significantly broaden the requirements for private schools to maintain tax-exempt status under Section 501(c)(3). These new rules, slated to take effect for taxable years beginning on or after May 31, 2027, would prohibit any policy or practice that discriminates based on race, color, or national or ethnic origin. The scope of these regulations extends beyond admissions to include scholarships, financial aid, athletics, facilities, and other school-administered or school-supported programs. Notably, the proposal asserts that "all forms of racial discrimination in education, regardless of the intent behind or the legality of such discrimination… are against a fundamental public policy of the United States." This would modify Revenue Procedure 75-50, which previously allowed schools to give preference to minority groups for remedial, diversity-related, or other legal objectives. While religious affiliations can still be a basis ... 
